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Banks in Archegos Aftermath Tighten Credit Lines, Scrutinize Swaps

Published by

November 28, 2024
(GMT+2)

Banks across Wall Street are seeking to secure the lending terms of some of their hedge-fund clients on the heels of Archegos Capital Management’s collapse.Firms including Credit Suisse Group AG, Morgan Stanley and UBS Group AG are reviewing their businesses that provide financing to hedge funds and family offices for potential vulnerabilities to defend in opposition to another Archegos-oriented event, stated bankers and hedge-fund managers.Archegos is the New York family office of the one-time hedge fund manager Bill Hwang. Its March collapse set off one of the largest sudden trading losses in Wall Street History. Archegos took massive bets on certain stocks using a combination of cash and swaps with money borrowed from banks. It was unable to meet margin calls as some of its largest positions started reversing, and the fallout from its collapse is still unfolding. Wall Street’s losses-$5.5 billion for Credit Suisse alone but also affected Nomura Holdings Inc., Morgan Stanley and UBS-are particularly surprising due to prime-brokerage and swaps desks demand collateral in return for their lending.

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